Legal Digest: Too Much Info Sinks a Contractor’s Proposal

Info Overload 2Many a contractor has submitted a proposal feeling great about the company’s chances only to be told their offers didn’t provide enough information or that content was misplaced. But, as one contractor discovered, too much info is just as bad.

1) Too Much of a Good Thing, Contractor Style

When Virginia’s Independent Systems, Inc. (ISI) decided to go after a small contract to supply two bulldozers for use at Coconino National Forest in Flagstaff, Arizona for the Forest Service, the company decided to leave no stone unturned.

Info Overload 3bAs a small company, ISI didn’t have bulldozers sitting around. In its proposal, the company stated that it would buy two bulldozers from the manufacturer if it was awarded the contract.

ISI went so far as to include a manufacturer’s warranty plus sales and warranty materials with its proposal. And, as Matthew Moriarty explains, that’s when the trouble began.

The contract officer found three items in the manufacturer materials disturbing:

  1. F.O.B. Terms – Free on Board (FOB) is a shipping industry term that describes whether the buyer or seller will have liability for transportation damage. FOB Destination means the shipper retains the liability. That is a standard part of a government contract. However, the manufacturer used FOB Shipping Point, which mean the buyer was responsible.
  2. Violates BPA Terms – ISI was a Blanket Purchase Agreement (BPA) holder. FAR 52.212-4 states that payment shall be made after delivery and acceptance of the contracted items. The manufacturer demanded payment up front.
  3. Non-Guaranteed Pricing – The manufacturer also stated in its materials that its prices were subject to change.

Given all these concerns the contract officer worried that ISI might face a situation in which it was unable to perform and excluded the proposal.

ISI protested, arguing that the unfavorable conditions only applied to its own company. ISI’s plan was to buy the bulldozers in the best deal it could work out. Then, the company would sell the equipment to the government under the conditions described in the RFP.

Moriarty writes:

In fact, in its protest, Independent Systems characterized these documents as “an additional item for evaluation, even though it was not required [by] the BPA[.]”

The GAO concluded that the inclusion of the manufacturer’s materials made the offer confusion:

[I]t was not at all clear from [Independent Systems]’s proposal which delivery and payment terms the firm was actually offering to the Forest Service.” GAO pointed out that various provisions of the manufacturer’s warranty pages “contained conditions expressly applicable to the ‘buyer’ and ‘user’ of the equipment,” which could mean the government.

In other words, if the manufacturer materials were not required, including them only muddied the waters. So, ISI’s protest was denied, and the loss of the contract was because it included too much info.

2) Understanding Best Value RFPs

When putting together a proposal, contractors need to know what must be included and how the proposals will be evaluated if they hope to win an award.

Classroom 2bSo, how should a contractor approach a Best Value RFP? Nicholas Solosky will walk us through it.

[With Best Value RFPs], an Agency is not looking just at technical ability or price – but how the two interact in order to maximize the benefit to the government. The award may be made to a higher-priced offeror, but only if that higher price is justified by a proper tradeoff analysis. Stated differently, is the contractor’s higher price justified by greater technical skill?

Solosky lists three issues to consider:

  1. Showcase Your Technical Skills – Unlike LPTA (where the proverbial C- or D+ proposal could get the award), the key is to go for the A+. Play to your strengths and show the Agency that your firm is not only capable – but highly skilled and able to deliver the best service. In maximizing technical skill, you’ll look to add those bells and whistles that show off your firm’s capabilities.
  2. Price Will Always Be a Factor – The Best Value combination of technical aptitude and price is particularly important for contracts involving complex, multi-disciplinary services because it gives the government the option of accepting a higher price in exchange for better odds of successful future performance. But what if the Agency gets the formula wrong? Fortunately, the GAO and Court of Federal Claims have recognized a number of avenues for challenging the Agency’s Best Value Trade Off.
  3. Protesting Best Value Awards – Bid protests of Best Value award decisions generally fall into one of two buckets: (A) The Agency overvalued the technical aspects of the awardee’s proposal (when a lower-priced offeror that believes that it is on par with the technical skill of the offeror) or (B) The Agency failed to recognize the technical superiority of a proposal (when a higher-priced offeror loses out to a lower-priced and allegedly less skilled awardee).

In these types of competitions, highly-skilled contractors can really shine. A higher price is actually OK — as long as you can show the agency that your superior skill justifies the price bump.

 Other Contracting News

3) What Does DCAA Have in Store for 2017?

Every contractor’s favorite agency has big plans for 2017, courtesy of some strategic priorities included in NDAA 2017. Aisha N. Mian, a management consultant for Aronson, attended a dinner recently in which Anita F. Bales, Director of DCAA, spoke.

DCAA LogoHere are the key points outlined by Mian:

  • DCAA/DCMA Partnership – With a goal of becoming more of “one government team.” the agencies hope to meet early with procurement teams to ensure forward pricing proposals are audited by the award date of the solicitation. Having forward price rate agreements in place should also speed up proposal audits.
  • Statute of Limitations (SOL) – While DCAA believes they are “out of the woods” for most SOL audits, both agencies are making further work on the issue a priority.
  • Small Biz Outreach – DCAA will offer more training sessions to small firms so they can ask questions and learn what to expect from a DCAA audit.
  • Incurred Cost Audits – While DCAA still doesn’t have enough auditors to complete Incurred Cost Audits, the agency will be allowed to work on non-DoD contracts in the future and is expected to continue using the agency’s low-risk sampling approach.
  • Defense Cost Accounting Standards Board – NDAA called for the formation of a standards board with responsibility to develop rules governing cost accounting for DoD contracts. The Board is expected to start work by October 1, 2018. Mian writes, “The implication of this would be two sets of CAS standards that would likely cause more confusion for contractors; especially, for those with a mix of DoD And non-DoD contracts. Additionally, Section 891 of the NDAA allows the DCAA to rely on contractor’s commercial audits of indirect costs except in the case of a company or business unit with a large amount of government cost-type contracts as a percentage of sales.”

So, a combination of same-stuff-different-day mixed with a new standards board that may issue rules that confuse everyone. Ain’t contracting grand?

Rules and Regulations


And, finally …

Space may be the “final frontier,” but it’s also one interesting place. Here are two cases in point:

NASA’s Cassini spacecraft is nearing the end of its mission by examining the rings of Saturn in greater detail than any other satellite.

These close views represent the opening of an entirely new window onto Saturn’s rings, and over the next few months we look forward to even more exciting data as we train our cameras on other parts of the rings closer to the planet,” Matthew Tiscareno, a Cassini scientist and Saturn expert the SETI Institute, said.

Asteroids whiz past Earth on a semi-regular basis. But, 2017 BH30 recently passed by this past Sunday at a distance astronomers refer to as a “creepy-close distance of only 40,563 miles.” No doubt the tractor-trailer-sized rock could have done serious damage if it hit our planet at the wrong spot. Here’s the lowdown on a couple of space rock encounters:

May the Force be with you …

Posted under: Acquisition, Contract News, DCAA, DCMA, Defense, Federal Acquisition Regulations, GAO, GSA, Legal, Management, OMB, Protests, Small Business Contracting

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